This Day-Henry Ford Doubled Wages
Today in 1914
What happens when the pay differential is sizable rather than incremental? That’s what Henry Ford decided to find out when he faced his own version of the Great Resignation. Today in 1914 Henry Ford made a bold and radical move. He doubled employee pay and reduced daily hours worked.
Mass Production in Progress
In 1912, Ford doubled production by doubling the company’s labor force. In 1913, the moving assembly line systems were fully in place. And the same number of employees produced twice as many cars. The 12.5 hours it had taken to build one car was now just 93 minutes.
Repetitive Equals Boring
Problem was, transforming productivity also transformed the nature of an assembly-line employee’s job. Automation and optimization quickly turned individual craft into mind-numbing repetition. Workers did one thing, one physically demanding thing, over and over and over.
Employee Turnover
Soon employees were quitting in mass. Ford’s annual employee turnover rate hit 370 percent. Imagine cycling through three employees for every job over the course of a year. A recruiter’s nightmare!
Bold and Radical
Ford took a radical step. Instead of raising the pay rate by 10 or even 20 percent, he doubled the basic rate from $2.50 a day to $5 a day. He also reduced the standard workday from 9 to 8 hours. Working fewer hours for more money was great for employees. It also allowed Ford to turn what had been a two-shift operation into three-shifts and dramatically increased the production capacity. This was a big win-win for both employer and employees.
Turnover Decreased
Within one year employee turnover fell from 370 to 16 percent. Production output increased by over 40 percent. Third shift jobs were easy to fill because workers flocked to Michigan in hopes of landing high-paying work. Henry Ford’s bold move dramatically increased overall production.
Raising Cost of Living
In 1910 a Model T car cost only $350. By 1919 that same care was selling for $800. The combination of higher wages and lower prices made owning a car possible for thousands of people.
And for the first time, the average Ford employee could also be a customer.
Cardinal Staffing Services – Finding Jobs for 28 Years
We understand there will always be daily challenges. That’s why we remain flexible to the needs of our valued clients and candidates. And why we remain the Best-In-Class staffing partner since 1994. We should be your staffing partner! Contact us Today!